I'm supposed to compete with Tim Haab?
Neither Rutgers University nor the University of Maryland has been considered a traditional football powerhouse. In the last decade, though, both have invested heavily in coaches and facilities in the hope of competing with the likes of Ohio State and Alabama. On the field, the outcomes have been mixed. Financially, the results have been dismal.
A year ago, the Rutgers athletic department’s deficit was nearly $28 million, bringing the hole it has dug since 2005 to $190 million. To offset the losses, student fees have been raised and state funds reallocated. Last summer, Maryland’s athletic department cut seven varsity sports in trying to patch a $21 million shortfall.
Both schools have hit upon the same solution to their athletic and fiscal troubles: Next summer, they will join the Big Ten, among the most storied conferences in college football. …
The conference generated $315 million in revenue in the fiscal year ended in June 2012, the most of any conference, and was expected to reward most of its member schools with a split of $25.7 million each the next year. The primary source of the money has been television — most of it coming from a lucrative contract that [Big Ten Commissioner] Delany negotiated with ESPN and from the conference’s own cable network, which Mr. Delany was mostly responsible for creating in 2007. …
Mr. Delany was among the first to recognize the influence of cable, then satellite. His biggest coup has been the creation of the Big Ten Network, which is expected to produce $270 million of revenue in 2013 for the conference and its schools. And yet, for all of the TV money now in college sports, according to a recent Moody’s study, 90 percent of athletic departments at public schools require subsidies from their universities to meet their budgets. …
Few expect the pressures to compete at Rutgers to lessen now that it’s joining the Big Ten. Ohio State’s athletic department spent $124 million in 2012, while Rutgers spent $64 million. “We’re supposed to compete with Ohio State?” asked Mark Killingsworth, a Rutgers economics professor.
via www.nytimes.com
My perception is that Athletic Directors promise that they'll raise private funds to cover the extra expenses required to build the things that attract recruits who win national championships. It is very easy to include this in a budget projection. Ninety percent of the time they don't hit their target and students suffer.
And TV? When I am able to watch UK (2-9) play UT (4-7) on a Saturday night, you know there are serious product quality issues. However, the biggest problem may be consumers with confusing brand loyalty.
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